Grim Economic Element Report Highlighted at Chamber’s Economic Summit 2.0 By Ward La Valley, CAP Coordinator The current process of updating the Calaveras County General Plan took another small step forward last October 15th, as the Chamber of Commerce played host to the second Economic Summit at Calaveras High School in San Andreas. The day long event of speeches, breakout groups, and lunch was highlighted by a review of the Economic Background Study conducted by Applied Development Economics (ADE), a consulting firm drafting the Economic Element that is likely to be included in the General Plan update. CAO Reports The review of the Background Study was preceded by a sobering review of County Government’s fiscal situation by Chief Administrative Officer Bob Lawton. Lawton, who surprised many by announcing his resignation two days earlier (see Updates, page 6), told the approximately 75 persons in attendance that the County’s unemployment rate (as measured by the Federal Government) was a staggering 14.4 percent, the worst since 1993, and worse than neighboring counties Amador (12.3%) and Tuolumne (12.9%). Lawton said that at precisely the time that demand for virtually all County services was increasing, General Fund revenues were declining due to the burst of the housing bubble and steep declines in real estate values. Lawton observed that today’s constraints on basic services – including public safety, public health, and planning – inhibit growth. While predicting that the tax roles would decline by 5% in 2009, Lawton said that revenues from the TOT (Transient Occupancy Tax) tax on tourists, while just a fraction of the total, were the one revenue source that was holding up during the downturn. Lawton concluded his remarks by giving two pieces of advice to the Summit. First, he said, Calaveras County should strive for a more diverse economy that is less vulnerable to volatility in the economy. Secondly, Lawton said, the Supervisors must not (again) fail to build adequate reserves when times get better. Economic Background Report The Summit was guided through the Economic Background report by Trish Kelly of ADE. Ms. Kelly told the Summit that the purpose of the Economic Element was to define the strategies, goals, and policies for economic development, and that a key goal was a more diversified economy for Calaveras County. Among the highlights of the Report were: 1. While the rate of population growth has declined since 2006, Calaveras County’s population has more than doubled since 1980 from around 20,000 to around 46,000 today. The migration consists mainly of retirees, but also a surprising number of younger professionals who are attracted by the natural beauty of the County. The report indicates that Calaveras County has, in addition to lots of laid off construction workers, commuters, and retirees, some 3,637 self-employed entrepreneurs. The report suggests that 65% of the potential labor force is employed. 2. Incomes in Calaveras County today are lower by 25% to 33% than State averages across the employment spectrum, and poverty rates are relatively higher also. 3. The Travel & Leisure industry accounted for $153 million in “direct spending” in Calaveras County. Travel & Leisure is the largest non-governmental sector of the Calaveras economy measured in jobs. Many new jobs in the T&L sector are relatively higher wage. Special events play an important role in attracting visitors and building the travel & leisure industry. 4. The category Natural Resource Industries, which includes agriculture, forestry, fishing, and mining, is “in transition due to changing demographics, regional population growth, weather conditions including drought, changes in commodities markets, the housing downturn, interest in value-added products and services, and linkage with the Travel & Leisure sector of the economy.” In 2008, the total value of agricultural production in County was around $20 million, down 6% from 2007. 5. Gaps in the retail spectrum in Calaveras County and large numbers of workers commuting to work outside Calaveras County result in loss of taxable sales; total taxable retail sales are declining, but evidence points to taxable retail sales by visitors holding more steady. 6. Between 2000 and 2007, Calaveras County issued almost double the number of residential building permits than neighboring Amador and Tuolumne counties; Ninety percent (90%) of construction valuation was for residential; nineteen percent (19%) of this new housing stock was estimated to be affordable by lower income households. Indicating severe supply and demand imbalances, the median sales price of a single- family residence dropped by 1/3 from $378,000 in 2006 to $250,000 in late 2008. 7. issues inhibiting economic development include: a) availability / adequacy of water and waste water infrastructure; fragmentation b) “insufficient clarity” in permit process c) backlog of development applications submitted during 2000 to 2007 d) lack of workforce housing – even with price drop many including nurses, teachers, and firefighters cannot afford housing in Calaveras e) Calaveras County does not currently meet air quality attainment standards and will need to implement measures to do so f) gaps in availability of high speed internet inhibit entrepreneurship g) there is “... insufficient funding for transportation improvements to accommodate growth” 8. New opportunities for economic collaboration exist, specifically in the areas of travel & leisure and value-added agriculture. Opportunities also exist to take advantage of “new policy initiatives and market trends for sustainability and clean technologies across all industries...” 9. Calaveras County is in a “good position to benefit from State and national programs.” Representatives of ADE indicated they did not know when the draft of the Economic Element will be finalized and made available to the public for review. Among the speakers were 2nd District Supervisor Steve Wilensky, who reported to the group on his work on the Amador- Calaveras Consensus group, a project aiming to generate local jobs and reduce fire danger by clearing forest underbrush, and utilizing the by-products in a number of productive ways. Later, the Summiteers separated into working groups, each tackling a different economic sector, for the first of two “breakout sessions”. Each group was under instruction to absorb what had been said thus far, brainstorm together, and then agree on three to five specific recommendations or suggestions that would highlight issues and encourage economic growth in that sector. Rico Oller Gives Keynote After lunch and between breakout sessions, the group heard a Keynote speech from Rico Oller. Mr. Oller, a former State Senator, State Assemblyman, and Republican candidate for Congress, is also a San Andreas businessman. Mr. Oller gave a direct and upbeat speech during which he asked the audience “how many of you were afraid this time last year?”, alluding to the financial crises that dominated the news in October of 2008. Oller said that he certainly was frightened then, but wasn’t frightened anymore. Although Oller later criticized the Federal government’s Troubled Asset Relief Program (TARP), a program some economists credit for restoring confidence to the country’s credit markets and avoiding a comprehensive world-wide financial meltdown in October of 2008, Mr. Oller told the Summit an anecdote the point of which was that when things aren’t working it sometimes pays to make changes, and if the changes start working then it probably isn’t a good idea to go back to doing the things that weren’t working. Breakout Groups Report Supervisor Gary Tofanelli presiding, the Summit concluded in the afternoon with presentations of each groups’ action items. The Agriculture & Forestry group identified as action items the lack of water distribution systems and other infrastructure, and the need for better coordination between water districts.. The group said there was a need to define the Chamber’s role (if any) in water issues and that there was need for more coordination between water agencies, County government, and the private sector. Encouraged by several representatives from Sierra Pacific Industries, the dominant logging firm in the Sierras, the group expressed the need for “recognition” of traditional extraction industries like logging and mining. The Manufacturing group identified the need to bring the small manufacturing component of Calaveras County’s economy more into sharper focus. They found that there may be possibilities for County manufacturing firms to buy some of their raw materials from local providers. They recommended that representatives from manufacturing firms organize and provide input into the General Plan update. Possible partners include the Calaveras Winegrape Alliance, Columbia College, and the Calaveras Consensus group. The Retail Services & Healthcare group had an extensive list of items centered on retail. First, the group recommended the creation of a Countywide Retail Merchant’s Association to better represent the retail sector. One of the first tasks of this Association would be compiling a census of current retail services with a view to identifying gaps in the spectrum of goods and services provided locally. Using this census, the group would initiate a host of programs, including encouraging local businesses to fill the gaps, mentoring and educating in a “business adopts business” approach. The group advocated creating a County Economic Development Department with paid staff to be funded by an increase in the tourism-based TOT (Transient Occupancy Tax). Finally, the group boldly advocated setting up re-development agencies, long a contentious issue in Calaveras County. The Travel & Leisure group focused on emphasizing development of the County’s abundant natural resources in the area of outdoor recreation. Specifically, the group advocated an increase in the TOT tax with a view to investing the revenue in developing the tourism industry locally. The group, agreeing with the findings of the Chamber’s first Economic Summit last year, recommended the County adopt policies to preserve the historic and natural resources of Calaveras County. Citing a promise to invest substantially in developing the resource by OARS (a leading travel and adventure rafting company headquartered in Calaveras County), the group recommended that the County take the lead in securing support for white water rafting on the Mokelumne River in Calaveras County. Also, citing statistics that indicate there are some 60 million owners of mountain bikes in the US, and looking at the economic successes of the city of Downieville, CA as an example in this area, the group recommended that efforts be made to develop biking trails in Calaveras County. Finally, the group advocated that more and better signage be developed and deployed to aid travelers driving from one County venue to another. The Construction & Development group settled on three areas that “warrant movement”. The first was related to the backlog of development applications that arose during the housing bubble, and the group suggested that the Planning Department “triage” the processing of existing applications according to some undefined economic standards. Secondly the group advocated setting up a “work group” to work with the County and City of Angels Camp to look for grant money, especially in the area of “green” and environmentally conscious building. In this vein the group suggested hiring a lobbyist. Finally, the group advocated adopting a Master Plan for developing the County’s infrastructure, while at the same time emphasizing the need to continue processing development projects while the General Plan is being updated. Although not necessarily a consensus view of the group, Acting County Assessor Leslie Davis, speaking for the group, said that the County should update the General Plan as quickly as possible, and then go back and correct any mistakes that may be made later. Conclusions 1. It’s Really Hard But We Have to Change to Diversify our Economy Several conclusions emerged from the wealth of words and ideas produced by the Summit. The dominant theme was the interlocking conclusions of the need for change, in both process and outcomes, and the need for a more diversified economy. Calaveras County needs to look at doing things in new ways. Since no one denies the benefits of a diversified economy that is less vulnerable to the cycle of quick booms and long busts that have plagued Calaveras County from the beginning, this should be easy. But of course it isn’t. Change is hard, and changes in attitudes and changes in how we approach land use decisions are especially hard. It means putting energy and ideas into all areas of the economy, including manufacturing as well as tourism, and not continuing along unsustainable economic models based solely on residential development and resource extraction. It will require a commitment to community planning that has been absent from County government for over a generation. 2. It’s Really Really Hard, But We Have To Cooperate Secondly, really moving forward on the majority of the identified “action items” will require a whole lot of cooperation. We’re talking about an unprecedented and comprehensive amount of across-the-board cooperation between County, State, and Federal governments, plus a raft of State, regional, and local districts and public agencies. Added to this will be the need for cooperation from the private interests, including 4th generation large landowners, big-time developers, and organized citizens’ groups like CAP/CPC, the Ag Coalition, and the Chamber of Commerce. And finally, for many, an obvious conclusion coming from the Summit was that the single best way to build on the ideas generated by the Summit was through the General Plan update process. This means Calaveras County needs to avoid making the mistakes of the past and take the time, do the studies, listen to the people, and get it right this time. 3. It’s a No-Brainer As the Background Study and breakout sessions make clear, there is an obvious symbiotic relationship between the County, the travel, leisure, and recreation interests, and the value-added agricultural interests, including but not limited to the wine industry in Calaveras County. Not insignificantly, we learned from both the CAO and the Economic Study that TOT taxes, paid by tourists, are an increasingly important revenue source for the County. This is not necessarily because of the raw amount currently collected, but because of the future potential and the fact that the TOT is immune (so far) from confiscation by the State, and appears to be relatively recession resistant compared to other County revenue sources. Over and over again visitors indicate that the natural beauty, open spaces, and relaxed rural lifestyle of Calaveras County influenced their choice to visit here. And over and over again residents of Calaveras County have indicated that these are exactly the same things they want to preserve. If we, through neglect, ignorance, or misdirected greed lose these things by continuing to develop as we have been, then we lose more than trees and habitat and pretty landscapes. We also lose real assets that have real value to the biggest private sector of our economy. This one is a no-brainer. The Chamber's Economic Summit 2.0 may or may not prove to be a significant step along the way to a more sustainable Calaveras economy. But, as questionable as the prospects are for the kinds of necessary changes to happen, the Summit did produce and re-emphasize ideas and opportunities that could, with a genuine commitment to change, economic diversity, and cooperation, build a more sustainable economic future for tomorrow.
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